The tax benefits of getting a Tesla as your company car

The tax benefits of getting a Tesla as your company car

Here at Sapphire, we’re all about helping you save money. Now unless you’ve been living under a rock for the past five years, you’ll most likely have heard about Tesla and their pretty impressive self-driving cars. But, that’s not all Tesla cars are good for…

Years ahead of their competition, “Tesla’s mission is to accelerate the world’s transition to sustainable energy.” But besides being fully electric-powered and being environmentally friendly, the Tesla Model S can also save you thousands.

VAT Savings

If you purchase a Tesla car for business use only, you will be able to claim back 50% of the VAT. Although, you do have to be careful to only use the car for business purposes, so no commuting or personal use. It is often the case that for these reasons, the car would need to be kept overnight at your work premises. This saving would not apply if your home was your office as you have availability of the car outside working hours.

1% Benefit in Kind (BiK)

If the car is for personal use as well though, you will need to pay benefit in kind, an additional tax applied to your income tax. Benefit in Kind for all Tesla vehicles until April 2022 is 1% and is planned to change to 2% in the tax year 2022/23. This is considerably lower than petrol and diesel cars which are taxed at higher BiK rates, which could end up costing up to 37%.

100% First Year Allowance (FYA)

By choosing a Tesla car, your business can claim a 100% year one deduction for the cost of the vehicle. This is available until 31 March 2025 for all businesses purchasing low emission cars. Find out more here.

Salary Sacrifice

This scheme allows employees to sacrifice some of their salaries to benefit from driving a fully electric company car. The amount is deducted before tax and National Insurance, similar to childcare, gym membership or cycle-to-work schemes.

London Congestion Charges Reduced

From 25th October 2021, the cleaner vehicle discount within the charging zone in London will change so that only battery electric vehicles are eligible. Tesla vehicles are also able to access the Ultra-Low Emission Zone without paying the noncompliance fee of £12.50 and from October, this will also expand to cover a larger area of London. If travelling in this zone daily, this could save you up to £4550 a year.

Electric Vehicle Loan in Scotland

If you live in Scotland, the benefits are even better! Transport Scotland funds an interest-free Electric Vehicle Loan of up to £28,000 for purchases of any new electric vehicles for personal use and up to £120,000 for purchases of new electric vehicles for business use. Find out more here, Electric Vehicle Loan & Low Carbon Transport Business Loan


If you have any questions regarding Tesla or any other tax benefits you can claim as a business, please get in touch and we would be happy to help.